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Duke Energy Conesville, LLC, et al., March 27, 2015 Letter Order

“Concerns regarding reactive power service payments made to some of the Beckjord coal plant’s units have been referred to the Commission’s Office of Enforcement, in light of the possibility that payments continued after the deactivation of these units. This referral is related to an Order to Show Cause issued last year regarding reactive power capability payments received by units in PJM that had either deactivated or transferred out of the fleet.1 PJM’s response to this Order to Show Cause, including proposed tariff revisions that it requests to be effective on February 20, 2015, is pending before the Commission.2

“I am concerned that, absent Commission guidance on payments for providing reactive power service to deactivated or transferred units, there may be uncertainty regarding potential action by the Office of Enforcement. At the same time, PJM projects that over 100 generation units will deactivate between April 15 and June 1, 2015, totaling almost 10,000 MW of capacity.3 Therefore, I write today to note that market participants have several mechanisms available to obtain guidance on compliance with Commission requirements regarding the provision of reactive power service.4

“Accordingly, I respectfully concur.”


    1 PJM Interconnection, L.L.C., 149 FERC ¶ 61,132 (2014) (directing PJM to either: (1) revise its Open Access Transmission Tariff to provide that a generation or non-generation resource owner will no longer receive reactive power capability payments after it has deactivated its unit and to clarify the treatment of reactive power capability payments for units transferred out of a fleet; or (2) show cause why it should not be required to do so) (Order to Show Cause).
    2 PJM, Compliance Filing Regarding Reactive Power Capability, Docket No. ER15-696-000 (filed December 22, 2014).
    4 See, e.g., Obtaining Guidance on Regulatory Requirements, 123 FERC ¶ 61,157 (2008).